TDS on Fixed Deposit: There are many options in the market for investment. Every investor selects investment according to his need, time line, risk tolerating ability, market status and financial target. One of them is a safe and attractive option fixed deposit (FD). This is an investment that is currently offering more interest. Let us know what is fixed deposit and how to calculate tax deducted at source (TDS).
What is fixed deposit (FD)?
Fixed deposits are an investment scheme in which the person deposits a fixed amount for a fixed time. It is a safe investment option to be done by banks, in which interest is received at a fixed rate on the deposited amount. Investors can take the payment of interest monthly, quarter, half or annually as per their convenience. It gives higher interest rates than a savings account.
What is Tax Didic at Source (TDS)?
Tax Didic at Source (TDS) is a tax -taking system in which the government directly deducts tax on the source of income. The person who pays another person (Did hakti). He has to first deduct tax and deposit it in the government’s account. TDS applies to many types of income, such as salary, interest on fixed deposits, fare, etc. This tax is deducted as per the tax department fixed rates.
What is TDS on FD on fixed deposits?
TDS on fixed deposits is the tax that deducts from the interest of the bank investor and deposits the government. This TDS is deducted as per the fixed rate and is added to the investor’s income tax account. Later it is added to the total income of the person.
How to calculate TDS on fixed deposits?
The interest received from FD is completely taxable. It is added to the income received from other sources.
The calculation of TDS is done on the basis of interest, deposit amount, period and tax slab received on FD.
If a person’s annual income is less than Rs 2.5 lakh, the bank will not impose any tax on it. However, in some cases, Form 15G or 15H has to be filled in some cases to claim tax exemption.
If a person gets less than Rs 40,000 interest from FD annually, then no TDS will be deducted on him. But if the interest exceeds Rs 40,000, the bank will deduct TDS at the rate of 10%.
If the person does not have a PAN card, the bank can cut 20% TDS.
For senior citizens (over 60 years of age), this limit is Rs 50,000, that is, they do not have to pay any TDS at interest up to Rs 50,000.
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